No new banking licences without legal powers: Subbarao

A day after Finance Minister P Chidambaram asked the Reserve Bank to speed up the process of issuing new bank licences, Governor D Subbarao on Friday said it would be not possible without fulfilling the enabling conditions for the same.

“We have been preparing for launching this process (of issuing new bank licences) but all the ground work, all the enabling conditions for launching this work have to be fulfilled,” he told reporters on the sidelines of a function here.

Yesterday, Chidambaram had said he had asked RBI to finalise the guidelines for new bank licences and start accepting applications for the same pending passage of the Banking Laws (Amendment) Bill.

“We have written to RBI recently urging them to proceed to finalise the guidelines and proceed to receive applications for new banking licences in anticipation of the amendment in the Banking Regulation Act,” the Finance Minister had said.

“We hope that RBI will pick up the thread and finalise the guidelines and start receiving the application.”

The Minister had said that “the power or the authority” which RBI wants is already available in the other provisions of the law and with the central bank’s own regulations and guidelines for new banking licences.

The last time RBI allowed new private banks was in 2002, prior to which it allowed new players in the mid—90s.

The RBI issued the final guidelines in August 2011 for entry of new banks, including those floated by corporates, but is waiting for the necessary legal powers before it proceeds further. The bank licences were initially slated to be issued way back in 2008—09.

Read more »

63,000 public sector bank jobs up for grabs this financial year

Government-owned banks will hire over 63,000 people, including officers and clerical staff, during the current fiscal.

“There are huge job opportunities for young men and women in banks. It’s a very attractive career, and young men and women must take advantage of it,” Finance Minister P. Chidambaram announced on Thursday, after a review meeting of public sector banks and financial institutions.

As on September 30, all Government-owned banks had a total vacancy (officers, clerks and sub-staff combined) of 84,489. Of this, banks plan to recruit 63,200 during the current financial year. As on March-end 2012, the total workforce of public sector banks (including nationalised banks, SBI and its associate banks) was 8,01,509.

The Finance Minister also said that the State Bank of India alone had plans to recruit 1,200 officers and nearly 20,000 clerks this year. As on September-end, the total vacancies in the SBI and its five associate banks stood at 28,979.

A senior Finance Ministry official said the Government, in consultation with public sector banks and Institute of Banking Personnel Selection (IBPS), has tried to simplify and rationalise the recruitment process. Now, there are common eligibility criteria and interview for all public sector banks and a one-time application fee.

He said the Government had also suggested carrying on the recruitment exercise in each cadre at least once a year. To fill vacancies in the clerical cadre, IBPS has already invited applications for an examination scheduled next month, he added.

shishir.sinha@thehindu.co.in

Read more »

Muthoot Finance to offer National Pension Scheme

The gold loan company Muthoot Finance Ltd has entered into a tie-up with the Pension Fund Regulatory and Development Authority (PFRDA) to offer the National Pension Scheme (NPS).

With this, Muthoot Finance becomes the only NBFC in Kerala to be approved by the PFRDA to act as a service provider for the pension plan.

The scheme is available to all citizens on voluntary basis and would include workers in the unorganised sector. The aim of the National Pension Scheme (NPS) is to promote old age income security.

George Alexander Muthoot, Managing Director Muthoot Finance said, “With our pan-India network of close to 4,000 branches in both urban as well rural areas, we will ensure that the benefit of this pension scheme reaches the maximum number of Indians.”

The salient features of the scheme are that it is open to all citizens between the ages of 18–60 years. The minimum subscription is Rs 500 per month with an option for investors to choose any growth scheme (active and auto choice).

The scheme assures regular monthly pension on attaining the age of 60 and tax benefit of up to 10 per cent of the individual’s salary (basic + DA) under Section 80CCD (2) over and above the current limit of Rs 1 lakh. The scheme also allows lumpsum repayment of funds of up to 60 per cent of the balance outstanding in the account on attaining the age of 60.

Read more »

SIDBI online contest for young entrepreneurs

With a view to promoting its new Web site, Small Industries and Development Bank of India (SIDBI) has launched an online contest for young entrepreneurs.

SIDBI, through its Web site initiative smallB.in, has announced a contest for young entrepreneurs to win Rs 50,000 for their innovative business ideas, the bank statement said.

In this contest, Indians above 18 can submit entries of their original ideas of their dream ventures, as well as analyse innovative businesses for smallB.in within the prescribed word limit. The entries are to be submitted on or before December 15, on its Web site.

It is an initiative by SIDBI to encourage and motivate younger generation including students, executives, bankers, housewives and self-employed professionals to opt for self-creation of wealth through innovative ways, the statement said.

Sushil Muhnot, Chairman and Managing Director, SIDBI, said: “smallB.in’s contest will encourage and empower everyone to think about starting a new set-up. It will facilitate innovative ideas that score on creativity and ability to implement.”

Beena.parmar@thehindu.co.in

Read more »

Allahabad Bank revises rates on term deposits

Allahabad Bank has revised interest rates on domestic term deposits below Rs 5 crore of varying maturities effective November 15.

While the bank has raised the rates of interest in the range of 25-150 basis points on deposits in varying time buckets; it has reduced rate of interest on deposit of one-to-less than two years by 10 basis points to 9.15 per cent.

The bank has also enhanced the maximum amount of deposit that can be accepted under AllBank Liquid Term Deposit Scheme to Rs 100 crore (Rs 50 crore), said a press statement issued by the bank.

Read more »

Religare gets nod for 49% stake sale in MF biz to Invesco

Fair trade regulator Competition Commission of India (CCI) today said it has approved Religare group’s 49 per cent stake sale in its mutual fund (MF) business to global investment management firm Invesco.

According to the deal reached in September, the US-based Invesco is acquiring 49 per cent stake in Religare Asset Management Company and Religare Trustee Company Pvt Limited, which manage assets worth over Rs 14,600 crore for Religare group’s mutual fund business.

Invesco is acquiring the stake through a group entity, Invesco Hong Kong Ltd, from Religare Securities Ltd and the deal is estimated to have valued Religare group’s mutual fund business at about Rs 1,000 crore.

In its order dated November 8 and released today, the CCI said that the deal is not likely to have any “appreciable adverse effect on competition in India” as Invesco does not have any direct or indirect presence in the Indian mutual fund and portfolio management services in the country.

The CCI further said that there are more than 40 other registered AMCs (Asset Management Companies) in the country and more than 250 portfolio managers providing their services, implying significant competition prevailing in these markets.

Invesco and Religare group had approached CCI for its approval to the deal in October, pursuant to which the fair trade regulator had sought some additional information. The replies to the CCI queries were submitted on November 1.

The CCI observed that New York-listed Invesco is a global investment manager and provides a wide range of investment products and services to retail and institutional investors across the world.

While Invesco does not engage in any of these activities in India currently, its affiliate in the country, WL Ross (India) Pvt Limited, provides advisory services in relation to private equity investment.

However, it does not operate in the mutual funds and portfolio management services markets in the country, while another affiliate, Invesco (Hyderabad) Pvt Ltd provides IT—enabled services, the CCI observed.

Read more »

Karnataka Bank cuts lending rate by 0.25%

Karnataka Bank today reduced base rate, or minimum lending rate, by 0.25 per cent to 10.75 per cent with effect from November 10, 2012.

“The Bank’s base rate now stands reduced to 10.75 per cent from the earlier 11 per cent,” it said in a filing to the BSE.

It also reduced rate of interest on deposits by 0.25 per cent.

With the reduction in base rate, all loans linked to the base rate would be cheaper by 25 basis points (0.25 per cent).

“The said reduction is applicable to the existing loans and also for the future loans. This will enable retail and MSME customers to avail funds at reduced rates and to stay competitive in their market,” it said.

Also, the housing loan up to Rs 25 lakh will attract interest rate of 10.75 per cent and car loans 11.25 per cent per annum.

Read more »

Private sector lenders such as HDFC Bank, ICICI Bank emerge as investors' favourite due to lower NPAs

After the September quarter results, private sector lenders such HDFC Bank and ICICI Bank have emerged as clear investors' favourite as public sector banks reel under the stress of rising bad loans.

The sluggishness in the economy is set to hurt all lenders, but state-run banks are likely to suffer more because of their exposure to infrastructure, which is expected to account for a big chunk of their NPAs. "PSU banks' valuations are cheap, but it is hard to say which bank will disappoint more on NPAs," said Abhijit Gulanikar, chief investment officer at SBI Life. "At the moment, private sector NPAs are under control."

The Q2 earnings show that bad loans at the top-five public sector banks rose by 80% against the 10% jump for private sector banks. "The private sector will continue to be preferred over the public sector as there is no sign of a trend reversal in the near term," said Vaibhav Agarwal, analyst at Angel Broking. "There is a huge divergence in net NPA and provisioning for private and public sector banks."

The price-to-book value of HDFC Bank is 5.05%, ICICI Bank is 2.02% and Axis Bank is 2.27%. In comparison, the P/BV at public sector banks is much lower - it is 1.72% for SBI, 1.14% for Bank of Baroda, and 0.99% for PNB. The price-to-book value is the ratio of market value of the equity to the book value of the equity. A higher P/BV means the company's shares are over priced.

Public sector banks would have posted a flat or lower growth in profits if they had made provisions for the increase in net NPA, said Agarwal. "A spike in NPAs is not unusual in the given economic environment," said MD Mallya, chairman and managing director of Bank of Baroda. "In the coming quarters, we expect revival and recovery to be better in the accounts that have gone bad."

Most problems for state-run banks arise from their high exposure to infrastructure such as power and roads, where projects are stuck at various stages due to administrative obstacles.

Read more »

Corp Bank observes Children’s Day

Corporation Bank celebrated the birth anniversary of Pandit Jawaharlal Nehru here on Wednesday. Ajai Kumar, Chairman and Managing Director of the bank, and Ashwani Kumar, Executive Director of the bank, paid floral tributes to Pandit Nehru’s statue in front of the corporate office in Mangalore.

Pradeep Kumar Kalkura, president of Kannada Sahitya Parishad (Dakshina Kannada district), Basheer Baikampady, president of Bharat Seva Dal district unit, General Managers and employees of Corporation Bank were present on the occasion.

Children from many schools and members of Bharat Seva Dal took part in the programme.

Read more »

RRBs need to open 1,700 branches this fiscal: RBI report

The 82 regional rural banks (RRBs) in the country need to achieve a 10 per cent growth in branch expansion in 2012-13. This, in spite of RRBs failing to achieve their branch expansion targets in the last two financial years.

The RBI’s ‘Report on Trend and Progress of Banking in India 2011-12’ says that the RRBs are required to open around 1,700 branches during 2012-13.

As per the Government’s advice, RRBs were to open around 2,000 branches during 2010-11 and 2011-12, however, they fell short of the target. They opened 521 branches and 913 branches during 2010-11 and 2011-12, respectively.

The report said the Government has advised all sponsor banks of RRBs that 10 per cent of the existing RRB branch network will be the target for the year 2012-13. As on March 31, 2012, RRBs had a network of 16,914 branches.

“Accordingly, RRBs will be required to open 1,700 branches during the year 2012-13,” the report said.

RECAPITALISATION

The Government’s plan to recapitalise RRBs is yet to gain momentum in some States.

Based on the recommendations of the K.C. Chakrabarty committee to study the current level of capital to risk-weighted assets ratio (CRAR) of RRBs, the Government had announced a recapitalisation programme in 40 of the 82 RRBs to ensure that their CRAR level reaches nine per cent by March 2012.

The Government, along with other shareholders, decided to recapitalise the RRBs by infusing Rs 2,200 crore. As a result of this, the shareholders such as the Government, sponsor banks and State Governments were to infuse Rs 1,100 crore, Rs 800 crore and Rs 300 crore, respectively.

The Central Government made a budgetary provision of Rs 500 crore for 2011-12 for this purpose.

Following this, the shareholders released Rs 1,000 crore to 27 RRBs in 16 States as on March 31, 2012.

The report said that the recapitalisation is complete in 16 RRBs. “Six State governments have not released any amount for 13 RRBs,” it said.
PROFIT

RRBs recorded net profit of Rs 2,000 crore in 2011-12 (Rs 1,700 crore), a 17.6 per cent growth. The CD (credit-deposit) ratio increased to 63.3 per cent (59.5 per cent) during the year.

vinayak.aj@thehindu.co.in

Read more »

Build robust mechanism to prevent e-banking fraud: RBI

The Reserve Bank of India wants banks to build a robust mechanism to prevent incidents of fraud in areas of mobile/Net banking and electronic fund transfer.

“With greater infusion of technology in banking, the incident of frauds in Internet banking has witnessed an increase in recent times. Banks need to improve customer awareness to contain incidents of frauds involving customers,” the RBI said in its latest Report on Trend and Progress of Banking in India.

Ensuring efficiency of the banking sector by way of technology infusion while minimising the occurrence of fraudulent events has become one of the major objectives of the Reserve Bank in recent years.

According to RBI, complaints related to unauthorised fund transfers, fraudulent withdrawals from ATMs using duplicate cards, phishing e-mails aimed at extracting personal information have registered significant increase in recent times.

beena.parmar@hehindu.co.in

Read more »

Seri Infra to set up white label ATMs

Srei Infrastructure Finance Ltd said it will set up white label ATMs (WLAs) to diversify its business.

The infrastructure non-banking finance company may be diversifying into the WLA business as the infrastructure financing business is facing a slowdown.

WLAs are the ATMs which are provided by third parties to banks.

Last week, Muthoot Finance decided to diversify into the WLA business. To accelerate the growth and penetration of ATMs in the country, the RBI, in February 2012, decided to permit non-banks to set up, own and operate ATMs.

The central bank said that the ATMs rolled out by non-banks would be in the nature of WLAs and would provide ATM services to customers of all banks.

Non-bank entities proposing to set up WLAs have to make an application to the RBI seeking authorisation under the Payment and Settlement Systems Act 2007.

Such entities are required to have a minimum net worth of Rs 100 crore at the time of making the application and on a continuing basis after issue of the requisite authorisation.

Read more »

United Bank in talks to offload stressed assets worth Rs 300 cr

United Bank of India plans to offload stressed assets amounting to Rs 200-300 crore to asset reconstruction companies (ARCs) by the end of this fiscal.

According to Deepak Narang, Executive Director, the bank is already in talks with several ARCs for the sale of its stressed assets.

“We have identified 70 accounts amounting to Rs 200-300 crore for offloading to ARCs. We will float tender and invite bids for these accounts,” Narang told newspersons on the sidelines of a press meet to announce the launch of U-Connect — a platform for share trading.

Valuation is one of the biggest issues in sale of such assets. “We are looking for the right kind of price for these assets,” he said.

The bank is also laying thrust on recovery mechanism to bring down its gross non-performing assets to 3.25 per cent (3.88 per cent during the July-September quarter) by the end of this fiscal.

United Bank had set a target of achieving cash recovery of Rs 450-500 crore by the end of this fiscal. The bank has already recovered close to Rs 200 crore during the first six months, Narang said.

During the July-September quarter, the bank witnessed fresh slippages of about Rs 200 crore. “We hope things will improve now and we are looking at ways and means of arresting fresh slippages and boosting our recovery mechanism to bring down NPAs,” he pointed out.

U-Connect

United Bank has launched an integrated online platform for stock trading in association with the Calcutta Stock Exchange. The product will help investors in Tier-II and -III cities by giving them access to both NSE and BSE.

This will also help boost the bank’s fee income and strengthen its current and savings bank account portfolio, Bhaskar Sen, Chairman and Managing Director of United Bank, said.

shobha.roy@thehindu.co.in

Read more »

Bank of Maharashtra to provide more loans to large corporates

At a time when major public sector banks and private banks are curtailing their exposure to large corporates, small banks like Bank of Maharashtra are stepping in to fill the void.

So far, the Pune-based bank focussed more on providing loans to agriculture, medium, micro and small-scale enterprises (MSMEs) and retail customers.

“We will increase our focus on providing loans to large corporates. We have a total market share of only 1.20 per cent. This is our opportunity to increase that,” Narendra Singh, Chairman and Managing Director, said. The corporate loan book of the bank is 37 per cent against the industry average of 50 per cent. The bank will grow its corporate loan book to 42 per cent of advances by end of this fiscal, said C.V.R. Rajendran, Executive Director.

“We take only 72 hours for either approving or rejecting loans up to Rs 250 crore,” said Singh.

Asset Quality

Slippages (gross NPAs) of the bank were at two per cent of total advances in the quarter ended September. After accounting for provisioning, NPAs (net) stood at 0.88 per cent. “The bank uses a judicious mix of SARFAESI Act, Lok Adalats, recovery camps and agents to recover its dues,” said Singh.

In this financial year, the bank is eyeing a cash recovery of Rs 600 crore against Rs 400 crore, a year earlier.

satyanarayan.iyer@thehindu.co.in

Read more »

Karnataka Bank cuts base rate

Karnataka Bank has reduced its base rate by 25 basis points with effect from November 10.

The bank’s base rate now stands reduced to 10.75 per cent from the earlier 11 per cent. As a result, all its base rate linked loans get cheaper by 25 basis points.

A bank release said here on Saturday that the reduction is applicable to the existing loans and also for the future loans. This will enable retail and MSME customers to avail funds at reduced rates.

The bank has reduced the interest rates on housing loan and car loan products by 50 basis points.

The release said the housing loan up to Rs 25 lakh will be extended at the rate of 10.75 per cent.

The revised rate of interest on car loan is 11.25 per cent.

The bank said that there is a corresponding reduction in the rate of interest on deposit by 25 basis points.

vinayak.aj@thehindu.co.in

Read more »